An advice till the censorship of science by the directorate of the Centraal Planbureau is lifted

Email to Paul Krugman

Subject: Your visit to Holland on June 19 for the session “Who holds the key ?”

Dear professor Krugman,

You will visit Holland on June 19 for a commercially funded conference “Who holds the key ?”,http://www.wieheeftdesleutel.nl/programma/ Of course, this relates to your column about “ernstig” people and your defence of Coen Teulings, who recently departed as director of the Dutch Central Planning Bureau (CPB).

I live a few blocks from the conference center, more towards the Scheveningen beach close to the Kurhaus hotel, and allow me to invite you to come over for a discussion with me too. I copy to Olivier Blanchard, Peter Bofinger, Martin Wolf, James Galbraith, Mark Thoma, and Robert Skidelsky, and perhaps some of them will support the idea that we finally get to talk.

I wrote this paper in 1997 with many compliments for your work but also some points of criticism. The paper apparently was included in the Unofficial PK website:

(1) You apparently do not see the impact of the tax void and the dynamic marginal tax rate.

The tax void is the tax wedge at the minimum wage. This location causes a special effect. Your proposals for quantitative easing will not work much for the unemployed who are locked up in the tax void. The tax void for the USA is here, see the appendix:

The dynamic marginal tax rate is the total-differential over time, rather than the mere partial differential. This affects discussions about the optimal tax rates. According to my analysis VAT can best be 1%.

See DRGTPE p140-145.

Both tax issues affect the shift of the Phillipscurve.

(2) A modern economy needs an Economic Supreme Court (ESC), rather than failing CPB’s or CEA’s.

(Perhaps you should ask the conference organisers to send you the two books DRGTPE and CSBH.)

(3) For the Euro, my new theory for the “optimal currency area” is that democracies with an ESC would not need to transfer power to the Brussels burocracy. See my paper “Money as gold versus money as water”:

(4a) You defended Coen Teulings, but as CPB-director for the last 7 years, he continued the censorship of science, and he did not check that the economic crisis 2007+ confirms my analysis.

(4b) Sweder van Wijnbergen was Secretary General of the Ministry of Economic Affairs in 1997-1999, and did not do anything about the censorship. He clashed with the minister on other subjects and had to resign. But he was a bureaucrat and had to be silent. While my position was that of a scientist, and I have to speak up.

Van Wijnbergen also maltreats the crititism of Alfred Kleinknecht on the Dutch export surplus. But part of the criticism on that export surplus is on target, see:

For unclear reasons the organisers see Van Wijnbergen as a better specialist on the crisis but he did not warn ahead of the crisis and maltreats the analysis by Kleinkecht, while Kleinknecht warned ahead of the crisis and has some useful things to say about the Dutch export surplus. It may be noted that the Dutch Ministry of Economic Affairs stopped funding Kleinknechts research so that he had to move from VU to TU Delft to continue it.

(4c) Bas Jacobs has not spoken up against the censorship of science. He does not check whether the crisis confirms my analysis.

Jacobs has investigated tax theory, along the lines of Mirrlees. However, my analysis on the tax void and the dynamic marginal tax rate are important qualifications for that line of research.

I have informed Jacobs and his two Ph.D. thesis students Floris Zoutman and Aart Gerritsen about my amendment to common tax theory. But they neglect it. E.g. in Dutch ESB 95 (4586) may 28 2010, Jacobs & Zoutman say that 52% top rate reduces tax receipts, where they refer to Emmanuel Saez, while the estimate ought to be improved, and they ought to have referred to my analysis.

(4d) According to the plan, you, Van Wijnbergen and Jacobs will be interviewed by Sandra Phlippen, chief editor of the Dutch economics magazine ESB. However, ESB has refused to publish my protest against the censorship since 1990. Dr Philppen is new to the editorial team and has said that she will consider the issue with an open mind. Two papers of mine are under review there since March 12, now for almost eight weeks while four would be the norm. I am still hoping for the best. One paper is a Dutch summary of “Money as gold versus money as water”, the other is an explanation in Dutch of the tax void. Both are quite easy to understand, so the real difficulty lies in my protest against the censorship of science by the directorate of the Dutch CPB. But perhaps dr Phlippen thinks differently.

Please note that I do not tend to write for the economic journals. My base line is that the censorship should be resolved at CPB, and thereafter I would be a free scientist again. I did submit a few papers at some occasions, but apparently those got rejected with nonsensical arguments. Apparently few editors have an overview of the various subjects that are involved for the proper analysis, like taxation, labour market, Phillipscurve, monetary policy, econometric methodology, institutional analysis, history of political economy, and such.

To be sure: I will not be present at that commercial conference or its VIP dinner. We once met when you gave your Tinbergen Lecture for KVS in Amsterdam, but you were severely challenged by lack of sleep, and you just managed to give your speech and shake hands. Even when this present occasion would be more suitable, you are still surrounded by professors who generate wrong analyses, who don’t listen to criticism, and who don’t speak up against censorship of science, so I better stick to my suggestion that we meet separately.